The Morning Jumpstart

OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)

  • SPI200 (Sep) overnight futures down 34 pts to 6719
  • SP500 down 15.89 pts to 3003.67
  • NASDAQ down 82.96 pts to 8238.54
  • Dow Jones down 128.99 pts to 27,140.98
  • FTSE100 down 12.41 pts to 748.05
  • DAX30 down 160.79 pts to 12,362.10
  • GOLD futures US Session (December) down $9.40 to $1427.10 an ounce
  • COPPER futures US Session (Comex Sept) down $0.0060 to $2.7060 a pound
  • OIL futures US Session (Nymex Sep) up $0.03 to $55.91 a barrel
  • CRB Index down 0.34 pts to 177.88
  • AUDUSD trading at 0.6952
  • EURUSD trading at 1.1147
  • GBPUSD trading at 1.2452
  • USDJPY trading at 108.6400
  • USD Index (ICE Sept) at 97.523 up 0.071

US Indexes were lower at the end of the session as mixed earnings and interest rates were the focus of the day. Traders are seeing the results of trade wars on earnings and weak guidance as the market trades at all time highs. A more hawkish ECB statement had traders wondering whether the Fed Reserve may really cut rates as expected going forward this year so will be eyeing the Feds statement closely. If the Fed shows any sign that they may only cut once more this year, it may have negative implications for shares. The DOW closed down 0.47% while the broader SP500 was down 0.53% and the Nasdaq led the charge ending down 1.00%. In Europe, markets were hit after the ECB disappointed the rate cut bulls. The ECB initially supported the market in the statement as they said that they see rates at present or lower levels through mid-2020 and that they are considering other easing options. The gains disappeared when the Draghi said the risk of a recession in the Eurozone was ‘pretty low’ and policy makers did not discuss interest rate cuts at Thursday’s meeting and they would wait for more data before ‘taking action’.

The USD Index continue to be the main focus and ended the session stronger being supported by generally better than expected economic data. The Dollar also found some support on the idea that rate cuts may be just an insurance policy rather than a full blown rate cut cycle. The Euro saw some choppy price action, while in the end, being supported from buyers as the news from the ECB and positive comments towards the eurozone was a signal to traders to cut shorts. The market had priced in cuts coming into the ECB statement and were disappointed with the lack ‘Dovishness’. The GBP continued the move lower on the ECB comments to give up gains from an earlier rally on back of a speech from the new PM. The AUD continued the trend from the previous few sessions to move lower on dollar strength. The USDJPY rallied sharply on the ECB comments and hawkishness from Draghi. The pair also got a lift from positive US data.

Gold fell overnight being pressured by stronger than expected US data and a rally into the USD. If we continue to see dollar strength we expect gold to come under further pressure and local Gold stocks to come under pressure from extended levels. Oil managed to rally through the Asian and European session making back losses from the spike lower into the US close the previous session. Any gains from the bargain hunting were giving back thanks to the rally into the dollar and the commodity ended back where it started. Copper also found earlier support through the Asian and into the European session only to give back the gains into the US close on the dollar strength.

Cryptocurrencies reversed some of the previous nights losses and edged higher as Bitcoin currently trades at $9932.8 up 2.39%. Ethereum is at $216.97 up 1.26% and Ripple is at $0.313254 down 0.80%.

The ASX200 backed up the previous session with another positive day yesterday to end up 41.3 points to 6818. The leading sectors were IT, Healthcare and Industrials while weaker commodities saw the Metals and Mining, Resources and Materials sectors down for the day. Rising stocks outnumbered declining by 677 to 504 and 363 ended unchanged.

The ASX200 is expected to open down 35 points as the SPI200 collapsed after the ECB were vague on rates and optimistic on the Eurozone economy. We expect to see the same action as yesterday with miners lagging as commodities continue to come under pressure from USD strength.

ECONOMIC DATA OUT TODAY (AEST)

JPY Tokyo Core CPI 9:30am

EUR German Import Prices 4pm

USD Advance GDP 10:30pm

SPI200 INTRADAY LEVELS TO WATCH